Letter of Credit in Bangladesh: Opening, Types, UCP 600, Recovery and Stopping Payment in 2026

Letter of credit Bangladesh: how documentary credits work in 2026

A letter of credit Bangladesh importers open today sits inside three layers of rules at once: the credit's own terms, the ICC's Uniform Customs and Practice for Documentary Credits (UCP 600), and Bangladesh Bank's foreign exchange regulations, which since 13 August 2026 have been collected in a single consolidated import circular. Each layer can decide whether goods arrive, whether a supplier is paid and whether a bank keeps its authorised dealer licence. Getting one of them wrong is how most trade finance problems in Bangladesh begin.

This guide brings together the full life of a documentary credit: who may open one and on what documents, how margin and credit lines work after the 2026 Import Policy Order, the types of credit in daily use (sight, usance, deferred payment, UPAS, back-to-back and credits funded by the Export Development Fund), the UCP 600 articles that matter most, how a beneficiary recovers unpaid proceeds, and when, if ever, payment can be stopped. Detailed dispute strategy and fraud litigation are covered in companion TRW guides, which we link rather than repeat.

Summary: An import letter of credit in Bangladesh can only be opened by an authorised dealer bank for its own registered customer, against a firm contract and a detailed proforma invoice, and must be a documentary credit under the prevailing UCP. Usance tenors, back-to-back limits and payment discipline are set by Bangladesh Bank's August 2026 consolidated import circular. Once the beneficiary presents complying documents the issuing bank must pay, and courts will restrain payment only for clear fraud or forgery.

Key point: Bangladesh Bank's FEPD-1 Circular No. 30 of 13 August 2026 requires authorised dealers to pay import liabilities on the due date and warns that failure may lead to revocation of the dealer licence and personal accountability for the officials involved. For a foreign supplier holding an accepted bill, that rule is often more persuasive than a lawsuit.

At a glance

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Table of Contents

How a letter of credit Bangladesh traders use actually works

A documentary credit is a bank's undertaking to pay the seller, as beneficiary, if the seller presents the documents the credit stipulates within its validity. The buyer, as applicant, asks its bank to issue the credit; an advising bank in the seller's country authenticates it; a nominated or confirming bank may pay or negotiate against the documents and claim reimbursement from the issuing bank. UCP 600 defines "honour" as paying at sight, incurring a deferred payment undertaking and paying at maturity, or accepting a draft and paying it at maturity.[1]

Two features give the instrument its value. A credit is irrevocable even if it does not say so, and it cannot be amended or cancelled without the agreement of the issuing bank, any confirming bank and the beneficiary.[1] And it is autonomous: the credit "is a separate transaction from the sale or other contract on which it may be based", and banks "deal with documents and not with goods, services or performance".[1] The seller trades the risk of the buyer's insolvency or bad faith for the risk of its own documents being discrepant.

Three layers of rules

Import trade is regulated by the Ministry of Commerce under the Imports and Exports (Control) Act 1950 through the Import Policy Order in force, while Bangladesh Bank issues foreign exchange instructions under section 20(3) of the Foreign Exchange Regulation Act 1947.[4] The August 2026 circular then requires authorised dealers to follow the prevailing UCP when issuing import credits, the latest Uniform Rules for Collections for documentary collections, and Incoterms consistent with the Import Policy Order. Where the two conflict, "local regulations will, however, prevail".[4] The export circular of 30 July 2026 imposes the equivalent framework on export credits.[5]

Why the 2026 consolidation matters

FEPD-1 Circular No. 30 replaced FE Circular No. 33 of 14 August 2025, repealed all earlier import instructions except the reporting rules in Volume 2 of the Guidelines for Foreign Exchange Transactions, and is valid for one year from issue.[4] In practice this means one document now answers most questions about an import credit, and that document will be reissued in 2027. Contracts, facility letters and internal procedures that quote older circulars by number should be updated. Our overview of foreign exchange regulations in Bangladesh explains the wider regime.

Opening an import LC: eligibility, contracts and the documents banks need

Every letter of credit Bangladesh banks open starts with the importer's status. Only a registered importer can open a credit. Under the Importers, Exporters and Indentors (Registration) Order 2023, no person can import goods unless registered with the Chief Controller of Imports and Exports or exempted.[4] Authorised dealers may establish credits only for their own customers who maintain accounts with them and are known to be in the trade, and import trade must be initiated through a dealer in the area where the importer is resident. A new customer must produce a certificate from its previous bank that no bill of entry is overdue, which the new bank verifies on Bangladesh Bank's Online Import Monitoring System (OIMS).[4]

A firm contract and a detailed proforma invoice

Before opening a credit the bank must see documentary evidence that a firm order has been placed and accepted, and each credit must give a full description of the goods and their unit price.[4] The 2026 circular is specific about the proforma invoice or indent. It must describe quality, brand, production date, packaging and grade; list multiple products separately with their own unit prices; use units suited to each item rather than a single unit for everything; state transport charges by reference to the Incoterm; and give the 8-digit HS code.[4] No bank may initiate an import without the correct HS code in the credit or contract, and customs may impose penalties for errors.[4]

Price checks, credit reports and large-value reporting

Banks must take reasonable steps to confirm that both parties are bona fide traders in the goods, that the exporting country usually exports them, and that the price is competitive with the international market.[4] They must obtain a credit report on the foreign supplier where the credit exceeds USD 30,000 against a supplier's own proforma invoice, or USD 40,000 against a local agent's indent; the report must come to the bank directly, and one report may be used for twelve months across importers.[4] Imports of USD 3 million or more must be reported to OIMS at least 24 hours before the credit is opened, except government imports.[4]

The IMP form, the LC application and the LCA form

Payment against an import is subject to the importer's declaration on the IMP form, in which it confirms that the payment is due, that the price is the correct market price on the contract date, and that it has no connection with or financial interest in the exporter; intra-group importers instead declare arm's-length pricing and transfer-pricing compliance.[4]

Older guides also refer to a separate letter of credit authorisation (LCA) form. The 2026 consolidated circular does not prescribe one: the operative documents are the bank's own LC application and facility documents, the IMP form at Appendix 1 and the OIMS reporting the bank carries out.[4] Banks will usually also require an insurance cover note before issuing a credit on CFR or CPT terms.

The bill of entry clock

The obligation that most often catches importers out comes after payment. The importer must submit the customs-certified bill of entry within four months of each remittance, or, for usance and acceptance imports, within four months of acceptance of the documents.[4] An importer that fails to do so, or whose bill of entry is not visible in the customs system, is barred from opening new credits without Bangladesh Bank's prior permission, and banks must not amend credits whose IMP reporting has remained unmatched for more than four months.[4] One missing bill of entry can therefore freeze an importer's entire trade line.

Margin, credit lines and the 2026 Import Policy Order

LC margin is the cash or equivalent security the importer deposits with the issuing bank against the credit. For several years Bangladesh Bank used minimum margins as a reserve-management tool. In September 2024 it imposed a 100 per cent cash margin on fruit imports, which it withdrew on 16 August 2026, leaving the rate "to the discretion of the respective banks".[8] The Commerce Ministry had already announced in September 2025 that the minimum cash margin requirement and limits on LC size would be lifted in the new import policy, because they did not comply with WTO rules.[7] The direction of travel is clear: margin is now a credit decision for the bank, negotiated with the importer, not a regulatory floor.

Credit lines and the payment behaviour framework

What Bangladesh Bank does regulate is the bank's capacity to pay. Before issuing a credit the bank must ensure an appropriate credit line exists for the importer; a credit issued without underlying facilities requires adequate cash flow and fund arrangements; and usance imports should be financed through buyer's credit from offshore banking operations or the bank's own funds.[4] Importers should expect a bank to ask for cash-flow evidence, security and, for usance imports, an undertaking that funds will be available at maturity.

The Import Policy Order 2026-2029

The Ministry of Commerce gazetted the Import Policy Order 2026-2029 on 24 August 2026, replacing the 2021-2024 order that had remained in force after it expired. The headline change for trade finance is that industrial and commercial importers may now import under purchase and sale contracts without opening a credit and without the previous value ceiling, which had limited commercial importers to USD 500,000 a year outside an LC.[6] The consolidated circular already provides for imports under contracts on usance terms, subject to the importer's past performance, a credit report and an undertaking on settlement at maturity.[4]

The credit therefore becomes a choice rather than a requirement for many importers. That choice should be made deliberately: an open-account or collection import shifts payment risk to the seller and leaves the importer without the documentary discipline a credit enforces. Our comparison of LC and telegraphic transfer in Bangladesh sets out when each method fits, and our guide to import and export licensing in Bangladesh covers registration.

Types of letter of credit in Bangladesh trade

Most credits issued in Bangladesh fall into a handful of categories, each with its own regulatory conditions. The table summarises them; on a phone, scroll it sideways.

Sight credits

A sight credit is honoured on presentation of complying documents. It is the default for commercial importers and for back-to-back credits funded from the Export Development Fund or from balances in non-resident foreign currency deposit accounts, which the circular allows on sight terms.[4]

Usance and deferred payment credits

Under a usance credit the bank accepts a draft, or under a deferred payment credit incurs an undertaking to pay, at a future maturity. Part D of the 2026 circular sets the maximum periods. Industrial raw materials for the importer's own use may run up to 270 days or the cash conversion cycle, whichever is earlier, and the bank must check that the stated cycle is realistic; for back-to-back credits the period follows the export proceeds repatriation period.

Spares, active pharmaceutical ingredients and certain steel inputs may run to 360 days, life-saving drugs to 180 days, and capital machinery to three years.[4] The all-in cost of usance interest may not exceed the benchmark rate, such as SOFR or Euribor, by more than 3 percentage points.[4]

UPAS credits

A usance payable at sight (UPAS) credit combines the two. The importer obtains usance, but the beneficiary is paid at sight by a financing bank, often an offshore banking unit or a foreign bank, which recovers from the issuing bank at maturity. UCP 600 supports the structure by allowing a nominated bank to prepay or purchase a draft it has accepted or a deferred payment undertaking it has incurred.[1] The circular permits authorised dealers to purchase accepted usance bills before maturity, treats the transaction as an extension of credit to the Bangladeshi party, and applies the same interest ceiling to buyer's credit.[4] The importer still owes the full amount plus financing cost on maturity.

Transferable and restricted credits

Authorised dealers may open transferable credits for imports and approve amendments that do not breach foreign exchange rules. They may not, without Bangladesh Bank's approval, open clean, revolving or standby credits, or credits with a realisation clause, except for companies in export processing zones, economic zones and hi-tech parks.[4] Standby credits and demand guarantees are analysed in our guide to bank guarantees in Bangladesh.

Back-to-back LCs for RMG exporters under the bonded warehouse system

The back-to-back credit is the engine of the garment sector. An exporter receives a master export credit from its foreign buyer and uses it as the basis for its own bank to open import credits for fabric, yarn and accessories. Only recognised export-oriented units operating under the bonded warehouse system, with valid registration and a valid bonded warehouse licence, may use the facility, and the value of imported inputs must respect the domestic value addition requirement set by the Ministry of Commerce.[4]

How the limits are calculated

The back-to-back value may not exceed the admissible percentage of the master credit's net FOB value, calculated by deducting freight, insurance and any commission payable by the exporter; if freight is not shown separately, the bank should ask for a certificate from the shipping company or agent.[4] The master credit must remain valid long enough to cover importation of inputs, manufacture and shipment, and every amendment to it must be tracked so that the back-to-back obligations never exceed what the master credit supports. Back-to-back credits against barter or special trade arrangement exports need prior approval.[4]

Inland and local currency back-to-back credits

Inland back-to-back credits in foreign currency may be opened in favour of local manufacturer-cum-suppliers of inputs who themselves operate under bond, and those suppliers may in turn open back-to-back import credits for their own inputs. Fully export-oriented industries settle inland credits in foreign currency only with manufacturer-cum-suppliers; purchases from local traders must be made through credits in Taka.[4] The Import Policy Order 2026-2029 also allows exporters to buy local raw materials in Taka through back-to-back credits or on a free-of-cost basis.[6]

Payment even when the export fails

Usance bills under back-to-back credits are paid at maturity from the export proceeds, which the bank sets aside in a separate foreign currency account. They must be paid at maturity even if the export never happened, the proceeds were not realised or the net proceeds do not cover the import. The bank then seeks Bangladesh Bank's post-facto approval within fifteen days of the following month, reports the export failure to the National Board of Revenue and the Commissioner of Customs, and supplies the bill of entry for bond as evidence that the inputs arrived.[4]

The courts take the same view. In Alif Casual Wear v Changzhou Hengwangjia Textile, decided on 18 August 2025, the back-to-back credit stated that "payment will be made after realization of related export proceeds". The UK buyer rejected the fabric and no garments were shipped. The High Court Division refused to restrain payment and held that the clause concerned the exporter's own arrangements and could not override the bank's obligation under Articles 4, 7 and 15 of UCP 600.[11] How such disputes are fought is covered in our guide to LC disputes in Bangladesh.

EDF financing for back-to-back imports

The Export Development Fund is Bangladesh Bank's foreign currency refinancing window for exporters' input imports. A consolidated EDF circular issued in July 2026 requires regular EDF loans to be settled within 180 days, extendable to 270 days with prior central bank approval. Bangladesh Bank refinances banks at the six-month benchmark rate plus 0.50 per cent, banks may charge exporters up to 1.50 per cent above the benchmark, and sector caps for back-to-back imports of up to USD 20 million were retained.[9] Exporters with overdue export proceeds are ineligible until the proceeds come home. In September 2026 Bangladesh Bank allowed EDF financing for bulk imports where local delivery bills under back-to-back credits are not outstanding beyond 270 days.[10]

Letter of credit Bangladesh documentation: what to call for and what to present

Documentation is where credits succeed or fail. On the import side, the 2026 circular requires every letter of credit Bangladesh importers open to be documentary and to provide for payment against a full set of shipped bills of lading, air waybills, railway, truck or courier receipts showing dispatch to Bangladesh, together with signed invoices and certificates of origin. Any further document the import requires, such as a pre-shipment inspection certificate, must be written into the credit.[4] Banks may also track vessels and containers through recognised systems to screen shipments.[4]

The standard document set

• Commercial invoice: issued by the beneficiary, made out in the name of the applicant and in the currency of the credit, with a description of goods that corresponds to the credit.[1]
• Transport document: a full set of originals, shipped on board, consigned as the credit requires; the risks of house bills and delivery without originals are covered in our guide to bill of lading disputes in Bangladesh.
• Insurance document: where called for, at least 110 per cent of the CIF or CIP value unless the credit says otherwise; under the circular, imports are usually on CFR or CPT terms.[1] [4]
• Certificate of origin and packing list: the origin certificate is mandatory for every import credit.[4]
• Inspection, quality or analysis certificates: the only way to bring the goods' quality inside the credit, by naming the agency and the content required.

Presentation timing and tolerances

Where a credit requires an original transport document, presentation must be made no later than 21 calendar days after shipment and in any event within the expiry date.[1] Words such as "about" or "approximately" allow a 10 per cent tolerance on the amount, quantity or unit price they qualify, and, unless the credit states a number of packing units or items, a 5 per cent tolerance on quantity is allowed provided the drawing does not exceed the credit amount.[1]

Export documentation

Bangladeshi exporters face an additional rule. Transport documents for sea and land exports must be drawn to the order of an authorised dealer bank and handed only to that bank, so that title stays within the banking chain until payment; documents may go to the importer's order only where full payment was received in advance or, for shipments up to USD 100,000, under conditions that include a certificate from the bank.[5] Exporters declare every shipment on an EXP form and must give the bank a signed hard copy, the customs-certified bill of export and the shipping documents within 14 days of shipment.[5] Our guide to export law in Bangladesh covers the export regime in full.

UCP 600 key articles for Bangladeshi banks and traders

UCP 600 has 39 articles, but a handful decide almost every letter of credit Bangladesh courts are asked to examine. Bangladeshi courts and Bangladesh Bank both treat it as the governing standard, and the High Court Division in Alif Casual Wear applied Articles 4, 7 and 15 directly.[11]

• Articles 4 and 5, autonomy: the credit is separate from the sale contract, and banks deal only in documents.[1]
• Article 7, the issuing bank's undertaking: the issuing bank must honour a complying presentation and is irrevocably bound from the moment it issues the credit, including to reimburse a nominated bank that has honoured or negotiated.[1]
• Article 14, examination: each bank has a maximum of five banking days following the day of presentation to decide whether documents comply, judged on their face; data need not be identical but must not conflict.[1]
• Article 15, complying presentation: once the issuing bank determines that a presentation complies, it must honour.[1]
• Article 16, refusal: a bank that refuses must give a single notice listing every discrepancy and stating what it is doing with the documents; if it fails to do so it is precluded from claiming that the documents do not comply.[1]
• Article 38, transfer: a credit is transferable only if it expressly says so.[1]

ISBP 821 and Bangladesh Bank's waiver rule

ISBP 821, the 2023 edition of International Standard Banking Practice, does not amend UCP 600 but explains how its examination standards apply. It confirms, for example, that a missing or mistyped credit number is not a ground for refusal and that issuing banks should not include administrative conditions such as bans on staples.[2] Under the 2026 circular, banks may pay discrepant import bills that the importer has waived on reasonable grounds, provided the waiver does not produce material changes, and must carry out due diligence before releasing goods against copy documents.[4] How refusals, preclusion and waivers are contested is analysed in detail in our LC dispute guide.

Recovering unpaid LC proceeds in Bangladesh

A beneficiary's rights depend on where the transaction has stopped. Before the bank has examined the documents, the beneficiary's lever is the five-day timetable and the preclusion rule. Once the issuing bank has accepted a draft or incurred a deferred payment undertaking, it owes a fixed sum on a fixed date, and the dispute is no longer about documents at all.[1] Most overdue payments under a letter of credit Bangladesh banks have issued are of this second kind: accepted bills left unpaid at maturity because of foreign currency shortages, a troubled bank or an importer that has not funded the account.

Use the payment behaviour rules first

The 2026 circular is the beneficiary's strongest tool. Authorised dealers must pay import liabilities on the due date; failure may lead to punitive action including revocation of the dealer licence and personal accountability for the responsible officials. Banks must review overdue accepted bills under a comprehensive action plan, put branches with high overdue volumes under special monitoring, report overdue bills monthly to Bangladesh Bank after verification on OIMS, and inform the supplier's bank if a bill under litigation is not payable.[4] A demand that cites the acceptance, the maturity date and these provisions, sent through the presenting bank, often unlocks payment without proceedings.

Complaints to Bangladesh Bank

Bangladesh Bank's Customer Interest Protection Centre accepts complaints from bank customers through hotline 16236, email, an online portal or post, after the complainant has first raised the matter with the bank and its complaint cell. It does not accept complaints on matters pending before a court, or third-party complaints without the account holder's written authority.[14] A foreign beneficiary is not the issuing bank's customer, so it normally escalates through its own bank, the presenting bank, which can raise the overdue bill with the issuing bank's head office and with Bangladesh Bank. Sequence matters: once a suit is filed, the complaint route closes.

Suit in the Commercial Court

Where a bank refuses to pay an accepted bill, or wrongfully dishonours a complying presentation, the beneficiary's claim is a money claim on the bank's undertaking. The Commercial Courts Act 2026, Act No. 23 of 2026, deemed in force from 1 January 2026, covers disputes over the ordinary dealings of bankers and merchants, including the interpretation of commercial documents, and disputes over the export or import of goods.[13] Pre-suit mediation applies where the government has made rules and no urgent interim relief is sought, and section 10 allows summary judgment where neither side needs oral evidence, which suits a claim on an accepted bill.[13]

DOCDEX and claims against foreign banks

Where the issue is whether documents complied, or a bank-to-bank reimbursement is refused, the ICC's DOCDEX procedure gives an expert answer quickly. Three experts appointed from the ICC Banking Commission's list decide on the papers, the draft decision is due within 30 days of receiving the necessary materials, and the standard fee is USD 5,000 for disputes up to USD 1 million and USD 10,000 above. The decision binds only if all parties agree in writing, and it is not an arbitral award.[3] Bangladeshi exporters facing a foreign issuing bank's refusal usually do best with DOCDEX first and a claim against the buyer under the sale contract second.

The exporter's regulatory clock

A Bangladeshi exporter chasing unpaid proceeds carries a risk the foreign bank does not. Export proceeds must be repatriated within four months, failing which the exporter faces action under the Foreign Exchange Regulation Act 1947, and banks must upload overdue EXP data to the Online Export Monitoring System by the tenth of each month, including litigation status.[5] Where a transaction runs into trouble, banks are told to guide exporters to change the importer's bank, obtain external payment guarantees or make other arrangements.[5] A documented recovery file protects the exporter twice.

Artha Rin: the bank's claim against its own customer

Recovery also runs the other way. When an issuing bank pays and the importer does not retire the documents, the bank's claim is a loan claim: section 2 of the Artha Rin Adalat Ain 2003 defines a loan to include a letter of credit that a financial institution issues on a borrower's behalf.[12] That claim belongs in the Artha Rin Adalat, which the Commercial Courts Act expressly excludes.[13] An Artha Rin suit is the bank's remedy, not the foreign beneficiary's. Our guide to the Artha Rin Adalat in Bangladesh covers procedure and borrower defences.

The steps below set out a recovery sequence for a beneficiary holding an unpaid credit.

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Can you stop LC payment in Bangladesh? The fraud exception in brief

An importer unhappy with the goods will often ask its bank, or a court, to stop payment. The answer is almost always no. In Alif Casual Wear the High Court Division restated the Appellate Division's position in Smart Apparels v Hanvit Bank that no court can restrain an issuing bank from paying under a credit, and held that the exception is very narrow: "clear and unambiguous proof of fraud in the documents themselves or forgery in the credit instrument".[11] Allegations of substandard quality or breach of contract belong in the underlying suit, and even if proved they sound in damages.[11]

Practically, an injunction application under Order XXXIX of the Code of Civil Procedure that rests on a quality dispute will fail on prima facie case, balance of convenience and irreparable loss, and an interim status quo order obtained in the meantime will be vacated, as it was in Alif.[11] A party with evidence of forged documents or a fictitious shipment should read our guide to LC fraud in Bangladesh, which covers the fraud exception, criminal remedies and asset freezing, and our note on the temporary injunction in Bangladesh. A complaint to Bangladesh Bank cannot stop payment either.

Who does what in the LC chain

The regulators, banks and forums that shape every credit are summarised below.

Letter of credit Bangladesh mistakes to avoid

• Vague proforma invoices: a PI without unit prices per item, grades and an 8-digit HS code will delay opening and invite customs penalties.[4]
• Ignoring the bill of entry deadline: one unmatched IMP form blocks new credits across the importer's banks.[4]
• Relying on realisation clauses: they need Bangladesh Bank approval outside the zones and, as Alif shows, do not protect an applicant against a complying presentation.[4] [11]
• Leaving quality outside the credit: if inspection matters, require a named agency's certificate as a document.
• Losing track of master credit amendments: back-to-back obligations must never exceed what the amended master credit supports.[4]
• Treating usance as free money: a UPAS or usance credit is a loan with a hard maturity date and an interest ceiling.[4]
• Suing before using the regulator: once a court case is pending, Bangladesh Bank's complaint centre will not take the matter.[14]

What to watch in 2026 and 2027

Four developments will shape every letter of credit Bangladesh banks handle over the next year. First, the consolidated import circular is valid for one year from 13 August 2026, so a new edition will incorporate the instructions issued in the meantime.[4] Second, the pilot framework for digital trade documents under credits and collections through approved trade corridors, governed by UCP 600 and eUCP where agreed, will test electronic presentation in Bangladesh for the first time.[4]

Third, the Import Policy Order 2026-2029 removes the value ceiling on imports outside credits, so banks will see more open-account and collection business and must monitor pricing and invoicing more closely.[6] Fourth, the Commercial Courts Act 2026 is bringing LC litigation into specialist courts with summary judgment and limited interlocutory appeals, while bank recovery stays in the Artha Rin Adalat.[13]

TRW advises importers, exporters, garment manufacturers, foreign suppliers and banks on structuring credits, back-to-back and EDF facilities, Bangladesh Bank compliance, recovery of unpaid proceeds and injunction proceedings. Our banking and finance practice and banking and finance litigation team work alongside our customs and trade compliance practice on every stage of a documentary credit.

Frequently asked questions

Who can open an import letter of credit in Bangladesh?

A person registered with the Chief Controller of Imports and Exports, or exempt, who holds an account with an authorised dealer bank in the area where it is resident. The bank must see a firm contract and a detailed proforma invoice.[4]

Is there a minimum LC margin in 2026?

Margin is now largely a matter for the bank. Bangladesh Bank withdrew the 100 per cent cash margin on fruit imports in August 2026 and left the rate to banks' discretion, and the new import policy was announced as removing minimum margin requirements.[7] [8]

Is an LC still compulsory for imports?

No. The Import Policy Order 2026-2029 lets industrial and commercial importers import under purchase and sale contracts without an LC and without the former USD 500,000 annual ceiling.[6]

How long can a usance LC run?

Up to 270 days or the cash conversion cycle for industrial raw materials, 360 days for spares and APIs, 180 days for life-saving drugs and three years for capital machinery, under Part D of the August 2026 circular.[4]

Who can use back-to-back LCs?

Only recognised export-oriented units under the bonded warehouse system with valid registration and a bonded warehouse licence, within the value addition limits on the master credit's net FOB value.[4]

Must a back-to-back LC be paid if the export fails?

Yes. The circular requires payment at maturity with post-facto Bangladesh Bank approval, and the High Court Division refused to stop payment on that ground in 2025.[4] [11]

How long does a bank have to examine documents?

A maximum of five banking days after the day of presentation under Article 14(b) of UCP 600, with a single refusal notice under Article 16.[1]

What can a supplier do if an accepted bill is not paid?

Demand payment through its bank citing Bangladesh Bank's due-date rule, escalate to the issuing bank and the regulator, and if needed sue in the Commercial Court, where summary judgment is available.[4] [13]

Can a court stop payment under an LC?

Only for clear fraud in the documents or forgery in the credit. Quality complaints and breach of the sale contract do not qualify.[11]

Is a DOCDEX decision binding?

Only if all parties agree in writing. Otherwise it is an expert opinion, not an arbitral award, though it carries weight between banks.[3]